NASSCOM EMERGE Community Catalyst for Growth of Emerging & Start-Up companies

We asked our country leaders and this is what they had to say 

UK: " The UK market is in turmoil as like US it has been hit hard with the fallout in the Financial Market. The ripples of which can be seen in other sectors too and as surely the UK market is slowly slipping into recession . The retail market and housing market has slowed down considerably. The mortgage market is just flat as only 50 products are available in contrast to 500 available same time last year. Unemployment has gone up. Immigration laws are been revamped for skilled IT workers effective 01 Nov 08. There are more emigration ( people leaving) than immigration.

Hari,

It was a great post from you! First hand and original information! Real showcaseof community value and power! Thanks a lot for sharing this

Suresh

My take on the Indian Software Industry was that it was in trouble BEFORE the US Economic Crisis hit. In Early AUgust we were hearing about Layoffs in many different IT companies, large as well as medium sized as reported by Times of India periodically.

Then as of last week the U.S economy has been through a 9.0 earthquake and the Tsunami will hit the Indian Software Industry in one or two months time. Many clients may not exist as they were prior to last week or consolidate themselves and a true picture will emerge only after two or three weeks from now. Will Washington Mutual survive as WaMu or become part of Wachovia? WHat happens to projects both of them have outsourced? Lehman's asia operations was just bought over of Namura Holdings of Japan. What will that mean to Lehman Bros India Operations?

Lots of uncertainty and a very tough time indeed! I think we should all keep our fingers crossed that the US emerges out of this with nicks and cuts and not huge sides of it missing. Cannot be good for anybody anywhere!

Hi All, Just sharing the NASSCOM statement:

The US financial market has been in unprecedented turmoil in the past few days witnessing bankruptcy, mega-take over and US government bail-out of an insurance company. This turmoil has directly impacted spending in the US financial sector and is likely to create a downstream impact on other sectors of the US economy and worldwide markets. It is however too early to estimate the extent of impact and this will depend on how the Governments and regulatory bodies step in to rebuild market sentiments.

The Indian IT-BPO sector is an integral part of the global ecosystem and is likely to be impacted in the short-term, as clients become cautious in their discretionary spending and decision making cycles get extended. Over the next few weeks/months we will get a better assessment of the impact on sectors other than financial and also their influence in geographies other than US where Indian IT sector services' clients. As in the past, NASSCOM will do an in-depth review of all segments in December and quantify the impact of the present developments.

The mitigating factor is that ever since the sub-prime crisis began, last year, the industry has focused extensively on improved utilization, enhanced productivity and business transformation. The industry will tread the period ahead with caution and take measured steps. In the past as well, this industry has shown resilience and has been able to overcome disturbances in demand, and come out successfully.

The next phase of economic recovery will focus on enhancing competitiveness, and use of technology will be critical to this phase. The India value proposition is today well established and Indian companies will look to partner with their customers as the global financial sector realigns itself.

I believe it is a wait and watch game. One thing is for sure that India cannot escape this calamity. However its long term impact is yet to be seen. On the other hand its immediate impact is being felt to a certain extent in the local real estate market and the IT, Hospitality and Airline industry. Thanks to stringent steps taken by RBI on the overall FII rules along with the FM and his team, we still havent experienced major impact in the business economy.

As history highlights, its a cycle in economy as China and India move towards leading the world economy in times to come. 

Its quite interesting for Indian businesses, as these events will make us re-think, re-plan and in other cases invent new strategies to stay afloat which I am sure is already taking place in the board meetings of many Indian companies. 

It would be quite exciting to know what business leaders like Mr.Murthy, Sunil Mittal, others have to say about the existing US turmoil.

Best,

Pritam

It is obvious that the IT sector did well in 2007 despite the rupee downward trend, the unfolding subprime crisis in the US, and pressure from many other sides. However things may not be all that positive in 2008 as the US economy is showing signs of slipping into recession. This bulletin looks at the impact of a US recession on Indian IT companies who are heavily dependent on the world's largest economy for business.

The BFSI sector has traditionally been one of the largest sources of business for Indian IT companies However this could change if the crises in the US financial sector continue. Already there have been some instances of troubled US financial companies withdrawing business from India or cutting down of new spending on outsourcing.

Indian companies have major outsourcing deals coming from the US. The uncertainty in the US has delayed the IT budget allocation by many companies. This is likely to cause delays in the finalization of large-value deals.

The impact of slowdown on IT budgets is still not clear but the IT spending related to banking, credit cards and mortgages could be affected. Clients may not be willing to spend more on volume. If this slowdown extends further, then Indian IT companies are likely to suffer. They may not get big deals and there could be negotiations on existing contracts, leading to pressure on the margins.

Driven by a growing domestic demand for IT services, India has been witnessing an outsourcing boom. The past couple of years saw a number of multi-million dollars outsourcing deals by Indian companies. Global IT services giants like IBM and Accenture have signed big outsourcing contracts with Indian companies. This trend is surely an opportunity for Indian IT service providers who have been mostly focused on the US market. They can use opportunities in the domestic market to offset for losses from US slowdown.

Tulika

With the Tier I and Tier II players having a lot of cash balance and having the ability to leverage their Balance sheets, I think it is a great opportunity for Indian IT companies to snap up other Large & Mid Market companies in the US, Europe , Australia & Japan.

Indian IT companies have run global operations and can manage multicultural Management teams and large pools of technical manpower.

I think it is a good time for Indian IT companies to buy and transform international companies.

let us not forget our community ...SMEs, with top line not more than Rs 50 Cr, with headcount not more than 100-300 or so.....with name sake ISO and CMMI certifications and small work space not more than 10,000 sq ft max total( some random assumptions) .......

what is in for us in this turmoil....any bright idea to break glass ceilings.......

I wonder if the smaller companies will be LESS hit by all this than the larger ones. The BFSI sector that the big companies went after by definition worked only with big vendors. And that is the sector that is most hit. Smaller vendors have worked with manufacturing, distribution and services companies and they, while definitely impacted, are probably going to be less affected than the BFSI companies. So the struggle that small companies go through to gain business may not become much tougher, although it certainly will not get easier.

One option for SME survival - and growth! - may be to identify services-driven implementations like Salesforce and build a practice around it specifically for SMEs. Defining the service offering can be done completely online and selling it can also be largely online, particularly to American customers (using AdWords, etc.). Instead of Salesforce, there are more specialized products that need implementation services, too, and that could make for an even more compelling offering.

A second option, of course, is to sell into other geographies - India, Australia, etc. Less affected by the likes of Lehman Bros., companies in these geographies will continue to grow, therefore needing all kinds of help.

My 2c.

My thoughts are as follows:

1. US BFSI slowdown -> like fasting for Ramzan/Navratra and feast at the end. As the US recovers there will be opportunities in new areas, new products, new merged companies 

2. Emergence of China/Japan/Korea -> if the CJK world controls the global financials, Indian IT companies have new skills and markets to look at 

3. Indian SME impact -> survial of the fittest. And consolidation opportunity for the smart players - the next big IT company wont be created as a startup but by a smart deal-maker aggregating the 500+ 200+ man;50cr+ companies.

4. Russia - dark horse.

Arvind

Every coin has a flip side and the impending slowdown which could well go on till September 2009 will have its plus points too - it will enable large companies to consolidate and samaller companies to identify niches as discontinuities emerge in the financial system where they can build products and services

It would be foolish to lose heart - instead re examine your strategic intent, develop a point of view about the capabilities required in future and choose the area you want to play in and win !

Avinash a number of EC members would be keen to develop this thread and you may want to send an invite all of them to contribute their thoughts for the benefit of members of the EMERGE community

One silver lining in all the dark economic clouds in the U.S and Europe is in the ITES side of things.

Bank of America today reached a settlement with the Attorney General of California to take all the distressed residential mortgages that they inherited from CountryWide Mortgage and essentially "Redo" them. This means that really bad mortgage loans that were made before without checking Employment or Income properly will go through this "regularization". They will be reducing the interest rate; in some cases they will be downsizing what is really owed on the mortgage and so on. This is a large manual job that needs people to work on the phone and on the backoffice systems to essentially redo all of the mortgage loan process. There is a huge volume of loans like this. Usually California leads the U.S in this kind of settlement and cleanups. So it is reasonable to expect a large volume of this kind of work to come to India, especially those ITES companies, large, small, medium that have mortgage loan processing expertise. This is something to watch since the same kind of really bad loans were made in U.K and Europe also. So there may be many residential mortgages that come up for a lot of manual work.

Here is an interesting article from the National Association of Call Centres -  $700 Billion can buy a lot of Call Center Time - http://www.nationalcallcenters.org/pubs/In_Queue/vol3no19.html

Great food for Thought and Strategizing for BPO/KPO business and its supply chain...

Wearing two hats - service provider and analyst - some observations:

- There will be a lot of pain. The issue is really about how each of us are able to overcome the pain - whether it be via cost-cutting, or better utilisation, or tapping into new markets.

- Secondly, given that our customers will also be hurting (probably, more than us), we will need to be innovative in providing solutions - not just in how we help them lower costs, but how we can help them grow (or save) their businesses. This is part of the broader trend towards "outcomes" rather than "input costs", and the current crisis will only accelerate this trend.

- I agree with Ganesh and Hari that consolidation will increase. However, I'm not so sure whether all the tier-2 and tier-3 companies will find easy exits. Most of the tier-1 companies that have the cash reserves are not looking at India capacity, but market access - so will prefer overseas acquisitions or those with extremely strong client lists, or those with rare "niche" capabilities.

- As for new geographies (India, Asia), while these are growing (and will continue to grow) faster than the US or Europe, markets are still small and very price sensitive. Further, if everyone decides that this should be the focus area, competition will be severe.

I believe that despite the current crisis (which has been hyped as usual), the US (and Europe) will continue to be the major market. Don't lose sight of this - patience, innoavtion and customer relationships - will lead to long term gains. Of course, this may take time - but abandoning investment in US market development may prove short-sighted. This is especially true of BPO.

I think all of us need to step back, re-evaluate our business plans, and re-align strategies and tactics. At the same time, we need to recognize that this crisis will (eventually) lead to greater impetus for outsourcing. Even though the time-frame is unceartain, the long term trend will not change.

Also, while focusing on problems, we tend to lose sight of the silver linings - lower attrition and wage inflation are two of these. Also, don't forget that the $ is now at 48+ to the Rupee.

Taking a cue from What Ganesh said about bigger players will be looking at consolidation and smaller players will have to look at niches . I think this is where Indian SMEs have to make a difference. We also have to learn a lesson from Automobile industry where there are hundreds of OMEs to support a large car or truck manufacturer. If manufacturing can accomplish such a humongous task of integrating a big manufacturer  with small, I think we've got to learn something from that model. This is a time for specialization, crafting affordable services/solutions that emerging markets are looking for.

The development of the last few weeks has created panic amongst all types of investors. The basic belief that a common retail investor had in financial analysts and stock market experts has once again been shattered. The current situation specially with Banks who are considered as  trustworthy institutions , well regulated for protection of investors has created havoc and this will lead to a near depression like situation in global markets. However I think the Indian market looks quite well set to absorb this shock. I think SME companies will have a very tough time for the next 12 months specially in closing new deals . Decision making will get delayed across the board and I think we have to revisit our projections and look at opportunities that we never considered before. I think government buying will not get affected much , nor would projects that have already received investments.

With the Rupee Dollar rate going topsy turvy, all FOREX experts have also been proved terribly out of sync with the realities of the marketplace. Honestly, I feel this is a good time to down size operations and re-engineer the business. Cash is King and this is best time to maximise the mileage a Rupee could offer.

There seems to be some good news after all! Today, the Dow Jones Industrial Average jumped up by 930+ points in the best day of trading in 76 years! They attributed this to European Gvernments shoring up European Banks with guarantees. It appears that the U.S treasury department's effort to get credit flowing again seems to be working again. The U.S government is the guarantor for short term credit - so banks seem to be starting to lend to each other through the U.S Govt. The Libor Rate which is what the banks charge each other for short term credit came down today after being very high for almost two to three months.

So what does this mean? This may only mean that the uncertainties on whether this is a recession or a total meltdown of the global economy seem to have been passed. This week, if the DJIA gains further or does not lose what it gained today, we may have seen the bottom of this very bad news season.

For Large as well as SME companies, the changes that are coming with their customers and prospects will shake out in two to three months and then only a clear picture will emerge. New news seem to be flying about consolidation in the Auto Industry with GM rumored to merge with Chrysler. There will definitely be some consolidation, and cancellation of one set of contracts. New contracts as well as older ones may be negotiated at very tough rates, both from U.S and Europe.

So the good news is that the bad news could have been worse! We will know for sure if the U.S and other markets hold up this week!

At the end of a multi city trip to the US, it seems like the last ten days have been ten years - wild swings in the stock market, predictions of doom and gloom from every quarter and some words of wisdom at the Harvard Business School - did you know that the failure of the Knickerbocker Trust in the US in 1907 caused a very similar financial crisis hundrede years ago ?  The world survived that and we will prevail this time as well

Having said that , the bottom is not yet reached so brace yourself for a few more bank failures and a few tough months for business !

Dear Members,

Its the time you need to catch up fast.  All you need to understand is that the Clients are equally looking for cost effective solutions with out compromise in Quality.  

Industry today is much open and wide for SME.

If you are looking out for an association who can Market and provide Business Development Services for your IT Products, Solutions, Services Cost effective manner Please get in touch with me.

High range conncections with C - Level Executives Globally.

Telecom, Healthcare, Banking, Logistics, ERP, Manufacturing, HR, Education, Pharma etc.

Having 11+ Years of experience in IT Industry.

Served Clients ranging Fortune 500, Global 2000, CMMi Level 5 etc.

Expert in Research, Marketing, Presentations, Business Development, Analysis, Client Retention strategies etc.

Thanks and regards

Srikanth.

09346777581

Dear Srikanth,

Please AVOID posting promotional material on a serious discussion thread like this. This will compromise the value of this forum. One option for you is to privately message a member, that too after qualification, about your services so that NOT all of us are SPAMed. 

I trust you will understand this and help us!

Thanks,
Suresh